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Wednesday, September 13, 2017

The Greek people are paying dearly
for having been lulled into a false sense of security, writes former Finance
Minister Yanis Varoufakis. Germans, he says, are laboring under the same
illusion today.

Complacency is a country's worst
enemy. My compatriots were, once upon a time, lulled into a false sense
of having "made it." I very much fear that a majority of Germans feel
their land is "doing fine."

That the federal election campaign is
proving such a tepid affair is a reflection of the false sense of security
generated by Germany's three surpluses: Companies save, households save,
the Frankfurt banks are awash with monies sent to them from other European
countries, even the federal government budget is in surplus. But these
surpluses are the sign of weakness, not strength. They are the harbingers of
significant current and future hardship for most Germans now and in the future.

Think about it for a minute: A
current account surplus of almost 10% of national income means that the
nation must take its savings and send it abroad to be invested in deficit
countries. Is this a prudent thing to do, especially when German capital abroad
is creating bubbles bound to burst (like they did in Greece and Spain)?

Also, how smart is it to rely on the
money influx into the Frankfurt banks to cover up their insolvencies,
especially when this tsunami of foreign monies is flooding Germany because
their Italian or French owners are losing hope in their own countries' economy?
Finally, how rational is it for the federal Finance Ministry to celebrate
a budget surplus that is due to the negative interest rates which (a) are
crushing German pension funds and (b) causing the famed Swabian housewife to
lose faith in the German political establishment?